IRS: 'Mistakes were made'

The Internal Revenue Service apologized Friday to conservative political groups for giving their tax documents extra scrutiny — validating the worst fears of Republican activists who have long accused the Obama administration of politicizing the process.

Roughly 75 groups were singled out using words like “tea party” or “patriot” in tax documents, Lois Lerner, who is responsible for overseeing tax-exempt groups, said on a hastily arranged conference call Friday afternoon.

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The White House said Friday that the IRS inspector general is investigating the matter.

“What we know about this is of concern,” White House press secretary Jay Carney said, emphasizing that the IRS is an independent agency with only two political appointees. The agency is technically a division of the Treasury Department.

“It certainly does seem to be based on what we’ve seen to be inappropriate action that we would want to see thoroughly investigated,” Carney said.

Decisions to review the conservative groups were made by career employees in Cincinnati, Lerner said, but she declined to say if anyone has been disciplined. Lerner added that the IRS never denied tax exempt status to any conservative organization — it only asked for additional information.

“Mistakes were made initially, but they were in no way due to any political or partisan rationale,” the IRS said in a separate statement.

The announcement is the latest black eye for an agency that has been criticized by members of Congress from both parties, reform groups and conservative activists for its handling of politically active tax-exempt nonprofits.

Senate Minority Leader Mitch McConnell called for President Barack Obama to order a “transparent, government-wide review” to see if similar practices are happening elsewhere in the administration.

House Ways and Means oversight subcommittee Chairman Charles Boustany told POLITICO he will launch an “aggressive” investigation. “We’re not going to let this rest,” the Louisiana Republican said.

“The IRS cannot target or intimidate any individual or organization based on their political beliefs. The House will investigate this matter,” said Majority Leader Eric Cantor (R-Va.).

Outside groups on both sides have increasingly chosen to organize as nonprofits — regulated and reviewed by the IRS instead of the Federal Election Commission. Their nonprofit status exempts those groups from paying federal taxes — and unlike super PACs, allows them to hide their donors.

Major outside groups like the Karl Rove-affiliated Crossroads GPS, Koch brothers-backed Americans for Prosperity and the pro-Barack Obama group Priorities USA are organized as 501(c)(4) nonprofits.

The IRS statement said the agency “should have done a better job” dealing with the dramatic influx in applications for 501(c)(4) status.

“When we see an uptick in applications from a particular type of group…that we don’t ordinarily see, what we do is we centralize those applications into one group to work on them. We do this all the time,” Lerner told reporters. “The problem here was that in some cases they added actual case names to the list. They added ‘tea party’ and ‘patriot’ to the list of cases that should be centralized in this group.”